$8M DOD grant aims to address defense downsizing

June 29, 2016
  • umichnews@umich.edu

ANN ARBOR—Michigan, Ohio and Indiana have lost more than 6,800 defense supply-chain positions in recent years—cuts spurred largely by the ending of two foreign wars and the current federal fiscal environment.

Based on a successful pilot project, the U.S. Department of Defense’s Office of Economic Adjustment has awarded $8 million to the University of Michigan’s Institute for Research on Labor, Employment and the Economy to assist communities and companies in the three states that have been impacted by these job losses.

“When communities are faced with the type of sudden and severe economic dislocation that can result from a defense plant closure or a mass layoff, it is necessary, but often difficult to create an effective community response,” said Lawrence Molnar, IRLEE associate director and the project’s principal investigator. “Our community-based scope of work combines assistance from both the public and private sectors in communities and regions experiencing or anticipating adverse impacts of defense downsizing.”

U-M and its partner institutions have already designed and started to implement strategic programs tailored to more than 40 companies and seven communities.

The new funds will support a two-year project that will target 72 communities and companies across Michigan, Ohio and Indiana. The goal is to generate diversification plans for these communities and companies so they are more resilient and can attract new business, while retaining and growing existing enterprises.

Since 2014, U-M has operated the Defense Manufacturing Assistance Program in partnership with Purdue University and Ohio State University. The new funding will allow DMAP to increase collaborations with regional defense industry research institutions in order to ensure the defense supply chain is ready to handle matters of national security.

“All of us at DMAP are excited about expanding our capacity to assist additional companies and communities through our resiliency and diversification projects,” said Megan Reichert, DMAP project director. “These added funds will enable teams across three states to have a significant impact in their respective communities.”

With each company and community, DMAP assesses many factors, including their financial health and market placement. DMAP then works with each company and community to implement diversification plans, which are jointly funded by all parties.

One such company that U-M assisted is Assem-Tech, a Michigan-based contractor that provides engineering, manufacturing and integrated assembly services. Assem-Tech lost defense contracts and consequently experienced job loss.

The U-M DMAP team worked with Assem-Tech to develop a strategic plan that would allow the supplier to capitalize on opportunities, expand its outreach and access new markets. The U-M team conducted market research, managed a website redesign and helped Assem-Tech secure aerospace quality certification.

“The co-funding that is offered in the DMAP program is great, but the real benefit comes from our opportunity to leverage professionals on the DMAP team and their contact lists,” said Assem-Tech President Mike Wilson. “The human resources that can be applied to a company’s diversification efforts are far more valuable than the co-funding.”

Today, Assem-Tech is growing and they expect their custom enclosure, wire harness and circuit board sales to more than double from 2014 to 2017. DMAP teams from Purdue and Ohio State have generated similar diversification plans for communities and companies that have yielded positive results across Indiana and Ohio.

The Purdue DMAP team helped Wirth Machine secure special certification, which created new market opportunities for the Evansville, Ind.-based custom machining company. With assistance from DMAP, Wirth Machine recovered from an unexpected 30 percent loss in revenue and they are on pace for 50 percent growth this year.

The DMAP team from Ohio State worked with UES, a small Dayton, Ohio-based manufacturing company, to diversify its technical product. With DMAP assistance, UES conducted primary market research, which helped the company identify a source of new customers beyond the defense industry.

“DMAP provided the impetus to go back and engage with our customers,” said Veeraraghavan Sundar of UES.

The Department of Defense’s Office of Economic Adjustment, under the Defense Industry Adjustment Program, funds DMAP.